All Forum Posts by: Jeff Burdick

Hi BP,

I am currently in Chicago and am beginning my real estate journey. I've become extremely interested in learning hands on when it comes to real estate through house hacking. After doing my research, it seems that a duplex would best fit my comfort level. Currently I've made searches leveraging Zillow, but find the results to be confusing and not as detailed. I've narrowed down searches through using the terms "multi-family" and "duplex". What tools would you leverage and how do you use them to find the best deal? I'm looking to purchase my first property (currently in an apartment, renting) within 18 months. 

Thank you in advance, 

Dannielle

Hi Everyone, 

I am 25 and pre-approved with 5% down on a $499,900 two-unit multi-family unit in an increasingly popular neighborhood of Chicago--fifteen minute Uber to Wrigley Field, surrounded by tons of public transit, new restaurants popping up, etc. 

Upstairs is a 3-bed 1-bath that I would live in, and downstairs is a 5-bed 2-bath including a basement. The entire mortgage would be about $3200 all-in, and if I could average just $500 per bedroom, that would cover everything. The entire building was bought in July 2016 for $250k, completely renovated, and now listed for nearly $500k. 

My question is, is $500k just too daunting of a loan to get started on? In Chicago where housing is expensive, I don't have the option like a lot of other success stories on here to buy a house for under $100k, or a multi-family for under $200k, and then generate enough revenue to get other tenants to pay my mortgage. Has anyone else out there ever started out like this with a high-cost building in an expensive city? 

Thank you, 

- Derek 

Hi Jeff - thanks for the thoughtful response. Let me start by saying I'm an Illinois native, and spent 30 years of my life there, and have owned properties in Chicago, selling off my last condo there about a year ago. I've been in Denver about 3 years now, and that is my primary point of comparison. In Denver, you can own a $400K property in the city and the taxes are between $2k-2.2K. Same property in Chicago ran $7K in taxes and in the burbs it would be between $10K-12K. Colorado income tax rate is at 4.63% which is higher than the current IL rate, but lower than the proposed that recently passed the house.

My post is/was focused on a suburb to suburb comparison, so I'm not going to get into the museum and public transit comparison, suffice to say Chicago is a world class city on that front and Denver is doing what it can to get there. That said, in the Chicago burbs, where taxes are significantly higher than the Chicago or anywhere in Colorada, the only thing they did consistantly better was snow plowing. I'll save my $8K and figure that out on my own.

Now to the population loss discussion. I've followed this closely. Yes, while the city of Chicago saw it's first net-population decline in some time, Crain's was quick to point out the it was predominantly in the middle class and lower, and the city saw an increase in higher earners, and further gentrification. That doesn't help a lot of smaller investors who are renting to the middle class, and aren't interested in competing with the high end sky rises that have popped up in the west loop, and are planned for the south loop river front.

That said, by raw count Illinois as a whole lost more people than any other state for the second year in a row and Chicago lost more than in any year since 1990. Yes proportionately, the population loss was small at .29%, but that's 32% higher than it was in 2015 (.22% loss) and more than triple what it was in 2014 (.09% loss) . That's not a great trend line.

To be clear, I love the city of Chicago, and having lived in San Francisco and Denver, still thinks it the best big city in the US. That said, I'm trying to be eyes wide open, and recognize the potential for that market to remain flat or even regress over the next decade while the state figures out how to balance and budget without further taxing a base that can't handle anymore. I'm interested in people thoughts on why they are confident this will turn around? Why they aren't following other investors and taking their money to states like Utah, Colorado, Florida, Arizona, that have seen significant population increases and the rent increases to go with it.

@Jeff Burdick yea so many options. We should connect I want to tell you what I am doing on the west coast. Do you have a email or a cell phone number on your profile? I am trying to figure out how to spend possibly half a million bucks in real estate!

@Jeff Burdick those neighborhoods why are they hard to manage because your dealing with thugs? How do you take those old run down neighborhoods and get them back to par? They seem like good investments at that price!

@Harsh R. Welcome to bigger pockets! I am also a first time investor we are selling some commercial property in corona at the moment. I am preparing a open house but not a house a office to invite first time investors long time investors anyone is welcome.  I am looking to invest in California first get my feet wet then maybe get a few out of state. I am finding homes for sale from $5000-$20,000 in Chicago.  Needing some work obviously a lot of work but for that price?!?!?

Hi All,

I'm curious how people are continuing to justify buy-and-hold investments in Illinois suburbs with the current state of property taxes. I've got my eye one pretty inexpensive property which is listed at $80K, with rents at $1,200 a month, which is a decent ratio, but the property taxes are $3K a year - a whopping 3.8% of the appraised value. I see similar ratios all over Illinois, where the current property tax as a % of the property value is hovering between 3%-4%.  $200K properties paying $6K a year in taxes. That is just crazy vs. the 1%-1.5% I see in many other states I have looked.

The other 2 scary factors are 1) with the pension obligations, I don't see IL property tax doing anything but increasing, all while the state continues to lose residents which diminishes the tax basis  2) Property taxes are a low/no value add expense. As I see it, I would rather that percentage of the expense be going towards improvements or mortgage paydown, not a set of state/city services that are not any better than neighboring states.

Curious how others are continuing to invest. Yes, "list prices" to rent looks good on paper, but the taxes . . . .

Just curious how many of my BP family has experienced negative pushback from family members when you discuss your real estate goals with them? I remember watching one of the webinars recently where they talked about telling everyone you knew your goals. Well pretty much everyone I've talked to thinks it's a bad idea. "You'd be crazy to waste your money like that" is just one of the responses I've gotten.

Hi All

Can anyone recommend an excellent CPA and RE Attorney? I'm looking to invest in the Chicago area, but not sure if I need to have them in Chicago. Any advice and recommendation will be greatly appreciated.